We’ve known for a little while now that McGraw-Hill will be spinning off its education division into a separate company by the end of the year. Today, in a 164-page filing with the U.S. Securities and Exchange Commission, it laid out how the split will work for investors.

The spinoff will create an independent, publicly traded company called McGraw-Hill Education, that will trade as “MHED” on the New York Stock Exchange. The company will include its higher education, K-12 education, assessment, and professional and international education businesses. That should set those businesses free of the corporate and investment strategies of the parent company, which also includes financial services like Standard & Poor’s. The education division restructured its management in recent months and laid off 540 employees in 2011. News Corporation recently announced similar plans to split its entertainment division from its publishing division (including education) into two separate companies.

As part of the split, investors will receive one share of stock in the new education company for every three shares of stock currently owned in McGraw-Hill. The company plans to finance the split with $600 million in loans.

There’s not a whole lot more about the specific split plans, but the filing included some interesting tidbits on the finances of the company. New education CEO Lloyd Waterhouse, hired last month after a long career in technology, mostly with IBM, will make $1 million in annual salary with a chance at earning up to $2 million in bonuses. The company also reported its digital revenue increased 30 percent each year over the past three, with larger increases coming in higher education.

Total revenue for McGraw-Hill Education in 2011 was $2.3 billion, a 6 percent drop from the previous year. The gap is widening between revenue in its higher education business and K-12, with the former accounting for about 59 percent in revenue in 2011. According to the American Association of Publishers, sales of instructional materials are down 15 percent through February of 2012, compared with last year.

For more insight on the changes at the company, and other stuff too, read my recent interview with McGraw-Hill president of school education Dan Caton.